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Many small businesses make the mistake of limiting their marketing budget to marketing communications costs such as advertising, public relations, direct mail and promotions. A true marketing plan includes the upfront planning, communications expenditures and ongoing monitoring and tracking of your marketing efforts. Include all three components of a marketing strategy in your budget plan to spend your dollars with maximum efficiency and generate maximum sales.

1.

Create a list of the different segments of your marketing efforts. Include research, testing, creative production, communications and tracking.

2.

Estimate the costs involved in gathering market research. Market research includes efforts such as developing a customer profile and examining your competitors. Include administering surveys, buying research studies and hiring a consultant.

3.

Estimate the costs of testing different marketing strategies. Include product giveaways, focus groups, creating different versions of your product, selling new items in limited locations and follow-up surveys.

4.

Estimate the costs of a communications campaign. Include the costs of creative design for packaging, ads, websites and other collateral materials. Calculate the costs for your desired media buys, such as print ads, website banners and TV and radio commercials. Include expenses for direct mail, trade shows, public relations, contests, promotions and the cost of building and maintaining a website.

5.

Estimate the costs of tracking and monitoring your communications efforts. This might include the purchase of a website statistics package, visiting retailers who sell your product or conducting customer mail or telephone surveys.

6.

Add up the total estimated costs. Determine whether you can afford the total price of your marketing plan. If not, review each category to see where you can cut back.

7.

Create a spending formula that ties your marketing budget to a percentage of sales. If your marketing plan is working, then the more you sell with it, the more you should consider spending on your marketing efforts. If your sales drop, a spending plan tied to sales will put in a place a brake that will alert you to reexamine each aspect of your marketing plan.

Things Needed

Advertising media kits

Tip

Decide whether to include sales expenses as part of your marketing budget. This would include salaries, commissions, trips and expense reimbursements.

Warning

Advertising agencies often charge a 15 percent commission, based on the amount of media you buy. Consider negotiating a set-fee contract to lock in your costs in advance.

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About the Author

Sam Ashe-Edmunds has been writing and lecturing for decades. He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. He is an internationally traveled sport science writer and lecturer. He has been published in print publications such as Entrepreneur, Tennis, SI for Kids, Chicago Tribune, Sacramento Bee, and on websites such Smart-Healthy-Living.net, SmartyCents and Youthletic. Edmunds has a bachelor's degree in journalism.